Debate on Public Health Insurance Plan Explodes in Senate

The debate over whether to create a public insurance plan to compete with private plans is about to explode in the Senate Finance Committee. The stakes are high and so is the suspense. (Update 4 p.m. ET Tuesday: Public options voted down. See Patricia Murphy's report here).

It's unclear what the outcome will be Tuesday when the committee, continuing work on its 10-year, $900 billion health reform bill, is scheduled to take up three versions of a public health insurance option.

The panel has 13 Democrats and 10 Republicans. Anything less than a solid wall of Republican opposition to all three proposals would be shocking. On top of that, several Democrats have reservations about some or all of the proposals.

By my count, there are nine Democrats in favor of or open to at least one of the three public options. Two favor Republican Sen. Olympia Snowe's proposal for state-level public options to be "triggered" if competition in a state falls short. Sen. Blanche Lincoln of Arkansas is a mystery. Committee chairman Max Baucus says he supports a public option but that it couldn't win on the floor.

The Finance Committee is often described as a microcosm of the full Senate – as in, leans moderate to conservative with a few liberals thrown in. What it's not is a microcosm of America, at least where the public option is concerned. Poll after poll has shown majority support, sometimes overwhelming, for a public option. (Update: There have also been some delivering mixed messages).

The public option would be a government-administered, self-sustaining plan funded by premiums and possibly co-pays. It would compete with private plans on an Internet-based health-insurance exchange, also called a gateway or marketplace, that is established by all the major health bills on Capitol Hill. President Obama says a public plan is needed to keep insurance companies honest. West Virginia Sen. Jay Rockefeller, a leading proponent of a public option, says opposition is "really just a vote for the insurance companies to make bigger profits and that is unacceptable to me."

The three proposals before the Finance Committee are:

Rockefeller: The plan would start in 2013 and abide by the same regulations as private plans. The secretary of health and human services could negotiate prescription drug prices and modernize the way medical services are delivered and paid for. Reimbursement rates would be based on Medicare rates plus 5% for most doctors. Hospitals and doctors that participate in Medicare would provide services under the new plan unless they opted out. Update 3 p.m. ET Tuesday:The committee defeated this amendment 15-8.

Schumer/Cantwell: The plan by Sens. Charles Schumer of New York and Maria Cantwell of Washington would be self-sustaining through premiums. The secretary would negotiate reimbursement rates and they could not be higher than the average rate of all other plans in the exchange or gateway. (This is the same provision included in a reform bill passed by the Senate Committee on Health, Education, Labor and Pensions). Update at 4:45 p.m. ET Tuesday: No vote is expected on this amendment.

Schumer Level-Playing-Field Option: The plan would be self-sustaining through premiums and co-payments, and like private plans, would have to establish a reserve fund. Reimbursement rates would be negotiated. The government could not use Medicare "like a stick" to get doctors and hospitals to participate. They could opt in if they wanted. Florida Democrat Bill Nelson has not committed to anything, but said recently that Schumer's level-playing-field option is "very attractive." Update at 4 p.m. ET Tuesday: The level-playing-field option was defeated 13-10.

If all of the above fail, the fallback is Snowe's "safety net fallback plan," or trigger. It would set up a non-profit government corporation to provide a safety-net plan. The plan would be available in any state in which affordable coverage was not available on the exchange to at least 95 percent of state residents. Update at 4:45 p.m. ET Tuesday: The trigger is unlikely to come up for a vote, given lack of support among both Republicans and Democrats.

Democrat Tom Carper of Delaware supports the Snowe trigger and Democrat Kent Conrad of North Dakota has said he'd consider it. Conrad is chief promoter of consumer-owned co-ops as a substitute for a public plan. The Congressional Budget Office says co-ops would be insignificant in most markets, and Rockefeller and Schumer are trying to knock them out of the Finance bill.

The committee convenes at 10 a.m. ET on Tuesday. Its work is often streamed live at the C-SPAN website.

Our New Approach to Comments

In an effort to encourage the same level of civil dialogue among Politics Daily’s readers that we expect of our writers – a “civilogue,” to use the term coined by PD’s Jeffrey Weiss – we are requiring commenters to use their AOL or AIM screen names to submit a comment, and we are reading all comments before publishing them. Personal attacks (on writers, other readers, Nancy Pelosi, George W. Bush, or anyone at all) and comments that are not productive additions to the conversation will not be published, period, to make room for a discussion among those with ideas to kick around. Please read our Help and Feedback section for more info.